A Tale Of Two Floods: Reconstruction After Flood Damage In New Zealand

Transcription

1 CIB World Building Congress CIB A Tale Of Two Floods: Reconstruction After Flood Damage In New Zealand Suzanne Wilkinson Kelvin Zuo Jason Le Masurier Jetske Van der Zon ABSTRACT One of the key issues to consider in post-disaster reconstruction is the development of a fast and efficient contractual system for rebuilding. The types of contractual systems available post-disaster will vary according to differing factors: such as industry familiarity, previous use of system, and the existence of standardised contractual methods. This paper compares reconstruction following two floods and the reconstruction and recovery processes following these natural disasters. These events caused major damage to infrastructure, and as a result required reconstruction strategies to be implemented. The study determines the current reconstruction systems being used, with particular focus on its contractual arrangements and procurement plans. Detailed analysis of the advantage and disadvantages of the systems used will be made. The paper concludes with recommendations for future development of post-disaster reconstruction contractual systems. Keywords: Reconstruction; Recovery; Floods; Contracts; Procurement 1. INTRODUCTION Various well-established and widely-applied contractual relationships to procure construction projects are available in New Zealand industry. For reconstruction after a natural disaster, such as in the aftermath of a flood or

2 2896 CIB World Building Congress 2007 an earthquake, it is likely that without a comprehensive reconstruction procurement framework specifically designed for this purpose, rapid reconstruction will be significantly hampered. Among various natural disasters that New Zealand is vulnerable to, flood is the one with the highest occurrence rate. This paper will first review the procurement systems and some specific government guidelines and regulations about contractual arrangements that are currently being used in New Zealand. Two recent flood cases, the 2004 Manawatu floods and the 2005 Matata floods, will then be analysed with respect to the use of New Zealand procurement systems. Some recommendations will be made for future development of post-disaster reconstruction contractual systems. 2. PROCUREMENT SYSTEMS USED IN NEW ZEALAND CONSTRUCTION New Zealand procurement systems have been well established and developed following the examples from generally recognised western models, such as traditional, design and build and project management. Like many other countries, a variety of contractual relationships to procure construction projects are widely applied within New Zealand construction industry. As defined in Best Practice Procurement (NZCIC,2004), a discussion document recently issued by New Zealand Construction Industry Council, procurement is the phrase given to the process by which clients and users achieve their construction aims but is more than just construction procurement, covering the process from initial concept planning and design, to development, construction, maintenance and ongoing monitoring of performance (NZCIC,2004). Procurement is critical as it determines the overall framework for construction, embracing the structure of responsibilities, risks, and authorities for construction practitioners. These are especially important for smooth delivery of postdisaster reconstruction because, if due consideration is given to them, they assist with rapid recovery of damaged communities. A wide range of procurement systems exist in the construction industry ranging from single stage traditional method at one end of the spectrum to Design and Build, together with new forms of contractual systems which are continually being devised to match client and community requirements, such as partnering and alliancing. According to Broome (2002), contractual systems can be generally divided into transactional contracts and relationship contracts. A purely transactional contract is one where the client specifies all the requirements of a project, this will define not only the practicalities of the project such as what is required but also the individual requirements of each project participant will be outlined (Henderson 2004). This form of contract is commonly termed as Traditional or Multi-point contract, using, in New Zealand the common standard contract conditions of NZS3910:2003. Compared to this, at the other end of the procurement spectrum are

3 CIB World Building Congress relationship-focused contracts, such as Project Alliance and Joint Ventures with an emphasis on the way the contributing parties working together to procure the project, and not the contract form (Broome 2002). According to NZCIC s report (2004), many problems facing the construction sector in New Zealand, such as a focus on costs over value, constrained innovation, inappropriate risk allocation, unsustainable market, can be addressed with a procurement shift from transactional to relationship contracts. A recent survey (Henderson 2004) established the proportions of the major forms of contractual relationships being used in New Zealand construction. Traditional contractual relationship were dominating the New Zealand construction industry. However, the use of pure partnering method and the combination ones with traditional tender are occupying 7% and 19% respectively, which suggest an increasing understanding and use of new procurement forms. Selection of appropriate procurement methods can influence the success or failure of a project and is especially crucial during a post-disaster situation where communities require a rapid response to recovery and reconstruction. Procurement is important in the reconstruction process after a natural disaster, but generally considered, it can be seen as a strategy designed to satisfy the client s development needs (Moore 2002). As for a disaster recovery situation, the client here is most likely to be the government bodies coordinating the reconstruction process. A welldeveloped protocol or stipulated procedure should be available and clearly understood by the involved government agencies and appointed coordinators in such an event (Moore 2002; Wilkinson et al. 2004). There are several guidelines that currently exist in New Zealand for Government (central or local) for procurement in normal situations. These are listed out in table 1: Table 1. Guidelines on procurement in New Zealand Government Bodies The Ministry of Economic Development s Regulatory and Competition Policy branch Association of Consulting Engineers of New Zealand and the Institution of Professional Engineers of New Zealand(ACENZ & IPENZ) The Office of Controller and Auditor- General Transfund New Zealand Guidelines for procurement Government Procurement in New Zealand Policy Guide for Purchaser (July 2002) Guideline on the Briefing and Engagement for Consulting Engineering Services (January 2004) Procurement A Statement of Good Practice (June 2001) Transfund New Zealand s Competitive Pricing Procedures (CPPs)

4 2898 CIB World Building Congress 2007 The Ministry of Economic Development (MED) s guide to procurement is the major guideline available in New Zealand for government procurement activities, it is intended to help government departments and other taxpayer funded agencies to support the government s procurement policy (Ministry of Economic Development's Regulatory and Competition Policy, 2002) but it does not provide significant guidance on processes for securing suppliers of large construction and/or building contract. The ACENZ & IPENZ guideline on briefing and engagement is used for selecting consulting engineers processes and has a focus on quality-based selection. According to the CIC (2004), the Audit Office s Guideline assists with understanding the importance of a well-structured procurement process, and importance of the basics careful definition of the specification, cost estimating, robustness and transparency of process, attention to detail in planning and project management etc (2004). However, compared to ACENZ & IPENZ s guideline, it does not provide guidance on how to embody the quality and value consideration in the actual selection step. Transfund NZ s Competitive Pricing Procedures, provides guidance in the transport sector, with a range from Lowest-Price Conforming procedures to Brooks Law procedures with an emphasis shifting from price to quality. 3. NEW ZEALAND RECONSTRUCTION EFFORTS - GOVERNMENT GUIDELINES There have been changes in the forms of contract and other types of project relationships used in some sectors of construction in recent years, and some of these maybe more suitable for post-disaster reconstruction projects than traditional systems (Wilkinson et al. 2004). Such procurement planning should form part of any reconstruction planning for major disasters. However, this appears to be lacking in New Zealand. A series of Recovery Plans prepared by New Zealand Ministry of Civil Defence & Emergency Management (MCDEM) in order to achieve greater standardisation and equity in central government policies for dealing with the aftermath of disasters (MCDEM 2005) provide some assistance in the reconstruction procurement process expected to be followed after a disaster event. The Civil Defence and Emergency Management (CDEM) Act 2002, established a framework for MCDEM to build resilient communities (2005a). As a part of this framework, a national CDEM strategy (2004) was also established, focusing on reducing the impact of emergencies through a sustainable approach to hazard risk management and pre-event recovery planning to cope with the long-term impact of disasters. Four goals have

5 CIB World Building Congress been identified in this strategy and the main interest of this research is to focus on the reconstruction procurement aspect within Goal 4 to enhance New Zealand s capability to recovery from disasters (Recovery within the 4Rs ). There are various published related documents about the postdisaster recovery issued by MCDEM available, such as Focus on Recovery, Preparing a Recovery Plan (2002), or the above mentioned National CDEM Strategy. The CDEM Act is the foundation for the CDEM environment upon which the National CDEM Strategy has been developed. The Director s Guideline and Information Series in combination with the National CDEM Strategy and CDEM Act assist in driving the planning processes involved in the development of CDEM Group Plans and the National CDEM Plan (2005a). Aiming at detailing the framework and responsibilities for disaster and emergency recovery operations and the principles and existing policies for post-disaster activity (2005b), the National Recovery Plan, does not directly concern itself with the reconstruction procurement process or related contractual arrangements. The plan focuses more on the general aspects of recovery activities and the resilience of the whole community. But there are some points, such as financial matters and insurance arrangements, addressed within the plan relevant to the cost aspect of reconstruction procurement. However, there is a lack of understanding of how construction works will be procured, how the industry will facilitate reconstruction, and who, in the construction industry, will be involved in procuring, and constructing such reconstructed facilities. This is confirmed by the involvement of central government in assistance of recovery which seems hands-off in both financial and physical aspects with the intension of encouraging the local authorities, businesses and individuals to initiate the reconstruction process. Central government would become involved only when recovery is beyond the ability of the community to manage. 4. NEW ZEALAND FLOOD CASE STUDIES New Zealand is vulnerable to various natural disasters, including floods. Disastrous floods have struck many parts of New Zealand and they are the most common cause of a civil defence emergency. Several so-called 100- year floods can happen in quick succession. Two recent floods that happened in New Zealand are the 2004 Manawatu floods and the 2005 Matata floods (also known as Bay of Plenty Floods). Both these events caused major damage to infrastructure, and as a result required general recovery procedure and reconstruction strategies to be implemented. 4.1 Manawatu 2004

6 2900 CIB World Building Congress 2007 According to the review team report (Reid et al. 2004a) on Manawatu floods, the storms and floods happened in February 2004 created the largest emergency management event in the past 20 years and was the first major event since the passage of the Civil Defence Emergency Management (CDEM) Act in December The events were so widespread and of such severity as to seriously stretch the response and recovery capabilities of the local authority and emergency management agencies involved (Reid et al. 2004b). Intense rainfall and gale force winds from February 2004 affected the lower North Island and the top of the South Island - in particular the regions of Taranaki, Manawatu- Wanganui, Marlborough, Wellington, and the Hawkes Bay. Up to 300 mm of rain fell on the already saturated ground of the lower North Island over two days. Rivers rose quickly, inundating unprotected farmland and properties. The flooding caused hundreds of people to be evacuated from their homes (with 2300 people evacuated at the height of the event), farmers lost sheep and cattle stock, many rivers breached their banks and considerable areas of farmland were inundated by silt and floodwaters. There was also significant damage to infrastructure such as roads and bridges, and rail services disrupted as well (Van der Zon 2005). In addition, there were telecom, power, gas and water supply outages to tens of thousands of people. Remarkably no lives were lost as a direct result of the event. Group recovery costs are estimated at million for rural sector and 120 million for roads and council infrastructure (Kumaran 2004). It is generally accepted that the end of day three, day four and part of day five involved Response phase work. Day five onward involved infrastructure Recovery. In order to understand the contractual systems used in this case, a chart demonstrating different parties involved in the reconstruction process of Manawatu floods is given in Table 2. Table 2. Involved parties in reconstruction process of Manawatu floods 2004 Client Contractor other parties involved Regional Council Higgins Automobile Association District Councils Road Transport Transit New Zealand Association Police MWH Whittakers Land Transport NZ Construction Road users Transit New Zealand (Transit NZ) was the direct client involved in a procurement relationship with the contractors. Transit is responsible for the management of 10,786 kilometres of state highway network, which has a replacement value of around $15.6 billions (Transit New Zealand 2005). Transit NZ is split up into a number of regions. Within each region they

7 CIB World Building Congress have a number of networks. East Wanganui Network was involved during the reconstruction after the floods. It covers the local authority areas of Rangitikei, Manawatu, Palmerston North, Horowhenua and Tararua. Transit developed three asset management procurement models within its network for the procurement of suppliers to manage and maintain these networks. These procurement models were applied during reconstruction of Manawatu floods. These models (Transit New Zealand 2005) are traditional, hybrid, and PSMC (Performance Specified Maintenance Contract): The services within the traditional model are separated between professional services and physical works. In a disaster event like Manawatu floods, the limited ability of such a framework to quickly respond to rebuild could be a disadvantage. Traditional procurement systems usually result in a longer completion time and a higher cost, which is inappropriate in the situation of reconstruction as financial resources are already be stretched. However, industry familiarity with the system and a quality output would be an advantage in such a situation. Hybrid Model utilises output-based contracting, relying on performance measurement, reporting and self-auditing to ensure supplier performance. The model relies on a co-operative environment between the contracted parties and seeks to maximise the skills, expertise, innovation and systems of the roading industry. If compared to the Broome s model (Broome 2002), it would be regarded as a management procurement approach which is between the traditional and integrated ends and it is more like a partnering or alliancing relationship. PSMC Model consists of a single contract for providing all the products or services associated with state highway network maintenance and management. In a similar way to the Hybrid model, the PSMC model utilises output-based contracting, relying on self-compliance by the supplier to ensure performance. It seeks to maximise the skills, expertise, innovation and systems of the roading industry so more efficient and improved value for money is attained. This model is similar to the integrated procurement methods used in a normal situation like Designand-Build, etc. The difference between the traditional contracts and the Hybrid contract is that the contractor takes more responsibility in day-to-day activities in a Hybrid contract. MWH and Transit had the ability, if required, to use all different contract forms. An example of this occurred during the recovery of the Manawatu Gorge. The Manawatu Gorge is a section of State Highway 3 that links Manawatu/Palmerston North with the East Coast of the North Island and Tararua District. In the Manawatu Gorge initial work was focussed on getting the road opened. This meant that MWH (consultant of Transit NZ) worked on plant hire on an hourly basis with their contractor Higgins. Higgins hired plant from another contractor to meet the needs of the emergency work. Other emergency activity included procuring specialist services for instance Maurice & Baley were contracted to do

8 2902 CIB World Building Congress 2007 some bridging and guardrail work. However, generally the reconstruction work was, where possible, managed within the existing contractual organisations. During the recovery process some existing contracts were used, but some special arrangements also needed to be made. For instance, MWH stepped outside that arrangement and tendered in the open market for restoration work on the more recent sites such as underslip 4 and underslip 5. A separate contract was also let for the restoration works on State Highway 54 in the Rewa Hill area that covered six slip sites. The consultant invited tenders and targeted people in the other contracts to undertake the work. In other areas MWH had let a contract for one site and subsequently they extended it to cover other sites. An example of this is the contract for the repairs of underslip 2 in the Gorge. This work was won by Whittakers Construction. Only two parties tendered and Whittaker was considerable lower priced than the other tenderer. After Whittakers construction finished their first task, the contract was extended to include underslip 5 as well. When that was successfully completed also underslip 6 would be included in the contract. During the reconstruction phase the involved parties were almost the same as in the normal situation. Transit NZ led the process and made the critical infrastructure reconstruction decisions (either directly or through its consultant). Working with existing consultants meant that the contract approaches do not differ from the normal situation but the circumstances of the reconstruction did differ from normal construction. In particular emergency services, civil defence and council maintenance crews were involved. Various utility providers, consultants and contractors worked 24- hour days to repair damaged roads and bridges, and restore disrupted services. The focus was on rebuilding quickly, hence the need to try and use existing contractual relationships, ones with a proven track record and relationships often based on mutual trust. 4.2 Matata 2005 On 18 May 2005 a band of very intense rain fell in the catchments behind Matata triggered many landslips, and several large debris flows. The destruction in the community of Matata was caused by debris flows. Although debris flows were the primary hazard at Matata on 18 May 2005, it was accompanied by flooding. This intensive rainfall appears to be approximately a 500-year recurrence event. The rainfall caused floods in the area and also triggered debris avalanche landslips, these landslips initiated debris flows causing widespread damage to highways and roads, bridges and housing and railway infrastructure. In response to the Matata disaster, a Civil Defence Emergency was declared 18 May 2005 and remained in place until the end of May. The Recovery structure (used

9 CIB World Building Congress during the Recovery phase after the Matata flood) lists the different parties involved. Five work streams reporting to the recovery manager were: (1) Media, (2) Reporting, (3) Hazards consisting of: Tonkin and Tailor (leader), Specialist engineering, Environment Bay of Plenty, Whakatane District Council, Department of Conservation, Iwi, Planning staff, EQC (Earthquake Commission), (4) Infrastructure consisting of Whakatane District Council (leader), Opus, Transit New Zealand, Fulton Hogan, Ontrack, (5) Welfare. Other parties involved were: Government, Insurance companies (AMI), Land Transport New Zealand (subsidy), Hazard Task Force, Infrastructure Task Force, Rural Task Team, Task Force Green, Smithbridge Limited. Whakatane District Council (WDC) appointed Tonkin and Taylor Ltd (T&T) to assist with disaster recovery activities and coordinate hazard and risk management investigations following the debris flows, flooding and widespread damage. Programmes of work were managed by the Whakatane District Council. The district councils was responsible for developing plans and recovering the lifelines such as roading, electrical services, telecommunications etc. Four engineering companies were contacted to put forward pricing and proposals for recovery of the Northern end of Herepuru Road, which was closed. The companies investigated all options and the costs of each option. Opus Consultants were awarded the tender to investigate long-term roading options for Herepuru Road. They were engaged by Whakatane District Council to progress the options for Herepuru Road. From the moment that the floods occurred in May, Transit took a lead role working with Whakatane District Council on roading infrastructure. Along with roads, rail networks were affected. Ontrack is the owner and manager of New Zealand s railway infrastructure. This team was concentrating on removing debris from Matata and after that they considered longer-term rail infrastructure. The Government was looking for an integrated recovery plan for Matata with Whakatane District Council and other relevant agencies. To facilitate this process the Ministry of Civil Defence and Emergency Management appointed a recovery facilitator. This facilitator worked together with the Recovery manager to rehabilitate Matata and provide an interface between central Government and Whakatane District Council. A Hazard Task Force was appointed whose original scope of work prepared by WDC included identifying what action plans and processes need to be put in place to address the short term and long term risks still facing Matata as a result of the event. This team worked with the Infrastructure Task Force whose responsibilities were to clear debris, to sort out roads and to get water on and back to a standard for use. As both Ontrack and Transit owned a significant part of the infrastructure in the area affected by the event, these organisations needed to work collaboratively with the Hazards and Infrastructure Task Groups to identify long-term solutions.

10 2904 CIB World Building Congress 2007 The contract to construct a new two-way rail underpass for State Highway 2 traffic was awarded shortly before the floods struck in May, but construction was delayed by the flooding. The contractor, Smithbridge Limited, won the contract for the underpass including the construction of the new underpass and a new rail bridge, realignment of the highway on both sides of the underpass, demolition of the old underpass, removal of the traffic signals, and installation of a speed threshold. The recovery phase started one week and parties came into action to clear the roads and the land from rocks, stones and debris. There was no tendering of work during this period. Parties had their own contractors and it was not necessary to involve new parties. When the reconstruction after 4-6 weeks took place, new parties were required for the work. The tendering was fast tracked and the parties approached were those with an existing relationship with the client (Brady, 2005). This had the effect of minimising disruption and the reconstruction work was accomplished using existing contractors with an already established relationship. It also meant that the same contracts can be used during the reconstruction process. 5. DISCUSSION In the Manawatu floods and the Matata floods the use of established relationships was evident when procuring reconstruction work. This has the advantage of the parties knowing each other and having familiarity with the contract types. However, disaster reconstruction requires the management of other external relationships, especially those with the councils and governments. General legislations applied during the recovery of the disasters are Civil Defence and Emergency Management Act 2002, Civil defence Act 1983 and Land Transport Management Act For the local authorities of the Manawatu and Matata regions the events involved arrangements under the provisions of the Civil Defence and Emergency Management Act (CDEM Act) According to the review team report for the Manawatu flood (Reid et al. 2004a), the Civil Defence and Emergency Management Act 2002 provides a structure appropriate for dealing with events like this. There was little difference between contractual arrangements of post-disaster reconstruction and normal time construction. Packages of work were tendered where needed. There was a focus on expediency but, with the existing strong relationships, much of the work could be done within the existing contractual frameworks. The parties that are normally involved during the construction projects in the areas studies were also involved during the reconstruction process, and this is certainly an advantage due to the industry familiarity and enhanced level of trust-based collaboration of existing relationships. Encouraging this form of relationship based contracting within the industry generally would improve the ability of New Zealand construction industry to respond post-disaster. This requires

11 CIB World Building Congress collaboration among involved parties and a higher level of industry familiarity and trust between the parties. 6. CONCLUSION The key lesson from the reconstruction efforts in the Manawatu and Matata floods was that the use of informal relationship-based contracting facilities quicker post-disaster reconstruction. The growing interest in, and use of, these types of contracting procurement strategies will improve the ability to respond to rapid reconstruction needs following a disaster. The case studies show that due to existing contractual and trusting relationships collaboration between the parties was quickly established, and contracts let. In the case of both floods, relationship-focussed contracting played a key part in the recovery and reconstruction. 7. REFERENCES (2000). "Conditions of Contract for Building and Civil Engineering Construction (variation)." NZS3915:2000. (2003). "Conditions of Contract for Building and Civil Engineering Construction." NZS3910:2003. (2004). "Best Practice Procurement in Construction and Infrastructure in New Zealand (Discussion Document)." Construction Industry Council. Benson, C. (2002). "Disaster Management." Pro-poor infrastructure provision, Department of International Development. Broome, J. (2002). Procurement routes for partnering: a practical guide, Thomas Telford, London. Henderson, D. (2004). "The status and potential of alliancing and partnering procurement methods in New Zealand construction." University of Canterbury. Henriod, and Le Masurier, J. (2002). The contract in successful project management, CAE publications, University of Canterbury, New Zealand. Henriod, E. (2003). "Evolution of the Engineering Contract." The Contract in Successful Project Management, E. Henriod and J. Le Masurier, eds., Centre for Advanced Engineering, University of Canterbury Campus, Christchurch. Khalil, A., and M.I. (2002). "Selecting the appropriate project delivery method using AHP." International Journal of Project Management, 20, P Kumaran, C. (2004). "The Floods of February 2004." Impact - Ministry of Civil Defence and Emergency Management Newsletter, 17. Larsen, R., and Munro, M. (2005). "Further Government Assistance for Bay of Plenty Flood Recovery." a Media Statement issued by Rt Hon Helen

12 2906 CIB World Building Congress 2007 Clark. Love, P., Schwab, J., Dalziell, E., Fitzharris, P., Dalziell, E., and Schwab, J. (1998). "Selecting a suitable procurement method for a building project." Construction Management and Economics, 16, P MCDEM. (2002). Preparing a Recovery Plan, Information for Local Authorities (IS4/02). MCDEM. (2004). "National Civil Defence Emergency Management Strategy " MCDEM. (2005). Focus on Recovery, A Holistic Framework for Recovery in New Zealand. MCDEM. (2005). National Civil Defence Plan Part - Two: Recovery Plan, natural disaster and emergencies within New Zealand. Ministry of Economic Development's Regulatory and Competition Policy branch. (2002). "Government Procurement in New Zealand - Policy Guide for Purchaser." Moore, D. (2002). Project Management: Designing Effective Organisational Structures in Construction, Blackwell Science Ltd., Oxford. Page, I. (2005). "Reconstruction capability of the New Zealand construction Industry." BRANZ Recovery Symposium. Reid, P., Brunsdon, D., Fitzharris, P., and Oughton, D. (2004). "Review of the February 2004 Flood Event - Review Team Report." Reid, P., Brunsdon, D., Fitzharris, P., and Oughton, D. (2004). "Terms of Reference." Review of the February 2004 Flood Event. Schwab, J., Topping, K. C., Eadie, C. C., Deyle, R. E., and Smith, R. A. (1998). Planning for Post-Disaster Recovery and Reconstruction. Transit New Zealand. (2005). Long Term Procurement Plan (June 2005). Van der Zon, J. (2005). "Post-disaster reconstruction." University of Canterbury. Wilkinson, S. (2003). "The New Zealand Standard Conditions of Contract." The Contract in Successful Project Management, E. Henriod and J. L. Masurier, eds., Centre for Advanced Engineering, University of Canterbury Campus, Christchurch. Wilkinson, S., Gupta, S., and Le Masurier, J. (2004). "The development of a contractual framework for disaster reconstruction." Wilkinson, S., and Scofield, R. (2003). Management for the New Zealand Construction Industry, Prentice Hall, Auckland.